Why Every Renter Needs Renters Insurance

Every renter should have and needs renters insurance. Renters insurance, which is also often known as personal property insurance, is essential for every renter no matter what your circumstance. Many renters forgo this coverage, and as a result, are putting themselves in financial jeopardy should something happen.

Why You Should Purchase Renters Insurance

Individuals should consider getting renters insurance to protect their property should something happen. A common misconception among renters is that the landlord will cover damage to their personal property if there was a disaster, like a fire or a flood. However, landlords do not cover the personal property of renters.

So, if there was a fire in your neighbor’s unit, and it spread to your unit, or the firefighters flooded your unit with their fire hoses, you would be out of luck when it came to replacing your stuff. The only thing that your landlord’s insurance would cover is the actual physical building structure. That is why getting renters insurance is so important.

What Renters Insurance Covers

Renters insurance is great because it covers a whole slew of things. First and foremost, it covers your personal property. It covers your personal property not just from damage but also from theft. It also protects your property anywhere. For example, if you had your laptop stolen from your college library while you were there, it would cover that as well.

Renters insurance policies can cover both the replacement cost or actual cash value, so choose one that best fits your needs. If your home is damaged and you cannot live there, renters insurance will also cover the cost of accommodations elsewhere. You simply need to ensure that your renter’s insurance policy includes that stipulation which most do.

If someone was injured in your unit and tries to sue you, renters insurance usually provides some type of personal liability coverage also. Again, many renters falsely believe that they would be covered by their landlord’s policy. This simply is not the case. The only time a landlord’s policy will cover a lawsuit is when an accident happens in a public place on the property such as at the apartment complex’s pool.

Understanding the Cost of Renters Insurance

The other great thing about renters insurance is the relatively low price. Depending on your coverage amount, your monthly premium could be as low as $4. Also, many renter insurance plans do not have a deductible, meaning that if you did need to file a claim, there are no out of pocket costs to pay prior to getting your items replaced.

It is always a smart idea to use a comparison engine to shop around before making any permanent decisions about your renter’s insurance. Some organizations, like AARP, offer excellent renters insurance that can provide numerous benefits. They can protect your belongings by providing cash reimbursements that accurately represent the monetary value of each item lost.

There are a number of optional endorsements available as well, such as assisted living care coverage, green rebuilding, equipment protection advantage, and several more. Keep in mind that these benefits differ depending on the state you live in. Thankfully, you can go online and see what benefits you’re eligible for in a matter of minutes.

Renters insurance is far too cheap and covers too many of your personal possessions not to protect yourself. Do not be caught off guard without having insurance to protect your personal property from loss, damage, or theft. And, do not make the mistake of going unprotected from lawsuits. Every renter should have and should have renters insurance.

About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications about investing, retirement planning, and even how to find the best return on investment. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.

Hank has written over 700 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

Subscribe To Money Q&A
If you want to learn more about taking back control of your money please subscribe to Money Q&A’s RSS feed or via email to receive all the latest articles! You can also subscribe to our Free Weekly Newsletter.

Reader Interactions

Comments

When I had just graduated college and rented my first place, I made a costly insurance mistake. It wasn’t the renters insurance mistake, though. I did have that (luckily never needed it). But the mistake was that I didn’t get rental insurance on my auto policy. When I got into an accident (not my fault, someone ran a stop sign) and my car took four weeks to replace, I was on the hook for the rental car. Oops. In other words, look at all of your insurance needs otherwise you’ll likely get burned!

That’s not true at all. It makes sense almost all the time. Your expected value of loss and break even point for the insurance (like all insurance) is the likelihood of you filing a claim multiplied by the potential loss. Even if the odds of you filing a claim are only 1% and a total loss is $100k which would make your expected loss from a fire, etc. $1,000, you have a lot of room in your premium payments above only $100 per year to make renters insurance a value added proposition if you wanted to look at it strictly from a finance perspective. And, that does not even consider the added value of peace of mind for you and your family that the insurance provides.

Wow, that’s just plain scary. To me, it is not worth the risk. $100k or so of coverage for $20 a month to protect my belongings from theft, fire, damage, etc. You may think that you and your family are very responsible, but what what is keeping the nut below you from burning the entire building down with all your worldly belongings in it?